Now that crude has lost 50% (and counting) since July, Andrew Gordon says the political will to develop alternative energy sources may be waning. But election favourite Barack Obama is fully behind clean energy. Andrew says this makes strong companies with new technology in biofuels, alternative energy and clean coal a good speculative buy. Another options is this Global Alternative Energy ETF (NYSE:GEX).

This from Investor’s Daily Edge:

John McCain is a practical guy. He subscribes to the “let’s try anything that works” theory. He’s willing to go with anything that weans the U.S. from Mideast oil. Nuclear, biofuels, ethanol, sun and wind, the traditional oil and gas hydrocarbons, tried and true coal and super-clean thermal and hydro energy – they’re all on table.

Throwing up a dozen tar balls and seeing what sticks isn’t much of a policy. But I see nuclear sticking. If McCain is elected, uranium and nuclear technology stocks should get a big boost.

But unless the polls are very wrong, this will be Obama’s day. Obama is more of an alternative energy guy than McCain, excluding nuclear energy, where Obama has more reservations than McCain. It’s a shame because nuclear energy should be part of our “solution” to energy.

Let’s go straight to the stereotype of Democrats. Obama will spend heavily on social programs, skimp on defense, regulate the dysfunctional parts of the economy (like banking) and seek a broader global consensus on foreign policy issues.

Sounds about right to me. Does the stereotype also work in the realm of energy and environment? You betcha. Get ready for stricter environmental controls, an emphasis on clean energy, and a cold shoulder toward Big Oil.

Obama wants government to spend $150 billion over the next ten years on developing clean energy. By the end of his first term, he wants 15 percent of all electricity to come from renewable energy. He wants to replace the equivalent of the oil we import from Venezuela and the Middle East with energy savings. And he wants to place a windfall tax on the profits of oil companies for revenues that come from crude costing more than $80 per barrel (He may have to hope for a second term for that to happen!).

Problem is, the oil crisis Obama’s energy program meant to address has come and gone.

In July OPEC convened an emergency summit in Riyadh to discuss a production hike due to the ridiculous high price of crude. And a couple of weeks ago it met again in Vienna to discuss an emergency production cut due to fast-falling prices.

Anyone with a sense of history knows that oil is the quintessential boom and bust industry. It’s the nature of the beast. Oil is rarely in a state of equilibrium. Oil prices are either bursting through the roof or plunging to pathetically low prices. And one phase can follow the other in a matter of months.

This has only been going on for the past 100 years. In the early 1900s, for example, the market was reeling from prices that had seen huge rises and falls…

“As the Spindletop wells continued to flow, a glut of oil developed very quickly. By midsummer of 1901, oil went for as little as three cents a barrel. By comparison, a cup of water cost five cents … the world had changed a great deal in less than two [years]. In the latter part of 1902 and into 1903, as a result of the plunge in production at Spindletop, oil was selling for thirty-five cents or more a barrel.” [From Daniel Yergin's excellent book, The Prize: The Epic Quest for Oil, Money & Power]

More than a century later, things haven’t changed much. The price of oil has fallen off a cliff. Out of tune with current circumstances, Obama’s energy program faces several obstacles…

• It’ll cost a lot of money. Where’s it coming from?

• Where’s the political will? It’s one thing to spend when the American consumer is being squeezed by high gas prices. It’s another to spend tax dollars to develop alternatives to cheap gas that is still going down.

• If OPEC reverts to form, it won’t be able to adhere to production quotas and keep oil prices from diving. In that case we could see oil burst through $40 and keep on going down. Energy independence just doesn’t sound as urgent when the sheiks are giving us oil for 80 percent off July prices.

Exxon reported record profits on Friday yet its share price rose only 0.5 percent on a day when the S&P 500 went up by 2.6 percent. Windfall profits? Investors weren’t impressed.If we’re going to punish the oil companies during the good times, we should subsidize them during the bad times. Oil companies aren’t the bad guys. Joe Sixpack likes big and powerful cars and his house warmed to toasty temperatures in the winter time. If gas and heating oil continue to go down as I suspect they will, my son’s friend will be able to sell his Hummer and make a 100 percent profit.

All this would count for more if both houses of Congress weren’t under Democratic control or if Obama turns out to have the backbone of Bill Clinton. As it is, you can’t ignore Obama’s conviction that renewable energy is the right thing to do … that energy independence makes sense regardless of price considerations … and that Americans consume far too much energy.

I agree. Low oil prices in combination with tight credit are hampering new investments across the spectrum of energy sources. A passive government energy policy (such as the one we’ve had over the past eight years) will guarantee that the next oil and gas shortage will be even more severe than the last one. You think $147 per barrel sounds high? How does $250 sound?

Alternative energy, clean coal, biofuels, hybrid cars will all get government help. Hopefully nuclear power will too but that remains to be seen.
Investing in companies with exciting technology and strong management in any of these sectors is a must. Or you could invest in alternative energy ETFs like Market Vectors Global Alternative Energy (NYSE:GEX).

Source: Is Renewable Energy Here to Stay?